Are banks opaque? Evidence from insider trading

Fabrizio Spargoli and Christian Upper

No 697, BIS Working Papers from Bank for International Settlements

Abstract: We use trades by US corporate insiders to investigate bank opacity, both in absolute terms and relative to other firms. On average, bank insider sales do not earn an abnormal return and do not predict stock returns. By contrast, bank insider purchases do, even though less than other firms. Our within-banking sector and over-time analyses also fail to provide evidence of greater opacity of banks vis-à-vis other firms. These results challenge conventional wisdom and suggest that, to assess bank opacity, the type of benchmark (transparency vs. other firms) and transaction/information (purchase/positive vs. sale/negative) are crucial.

Keywords: bank opacity; insider trading; financial stability (search for similar items in EconPapers)
JEL-codes: G14 G20 G21 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2018-02
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:697

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